The world is grappling with soaring consumer prices. The US, for instance, is struggling with the highest inflation in 40 years. China’s consumer inflation, on the other hand, has been subdued over the past year or so, largely because of the influence of falling pork prices.
That doesn’t mean that some more affluent Chinese shoppers aren’t seeing some stiff price rises. In fact, last week news surfaced that luxury brand Celine, which is owned by LVMH, had raised the prices for items like its expensive handbags twice in the last three months.
A wallet-on-chain item from Celine went from Rmb6,400 in the beginning of 2021 to Rmb7,400 by the end of the year. Early this month, the same purse’s price tag went up to Rmb8,900. Another leather handbag with the Celine monogram went from Rmb9,400 to Rmb10,500 last year. Last week, Celine increased the price for the bag again by another Rmb500.
The magnitude of the increases is even more prominent with the most coveted handbag styles.
The hugely popular Celine oval shaped mini leather handbag, which was sold out late last year, is now back in stock but its price has increased from Rmb14,500 to Rmb16,500. Industry insiders reckoned that on average, the prices of Celine handbags have gone up between 5% and 20% so far this year.
The pricing strategy is partly related to the brand’s rising popularity in China. To appeal to younger consumers, the luxury brand, helmed by designer Hedi Slimane, has tapped the Korean all-girl band Blackpink’s Lisa as its global ambassador since 2020. The endorsement came at a time when the pop icon was becoming a household name in China, thanks to her role as a mentor on one of the country’s biggest reality idol competitions (Youth With You which has since been cancelled after a promotional scheme resulted in a milk-wasting saga). Every Celine handbag Lisa was photographed carrying on the TV show quickly became a hot seller.
It’s not only Celine. Other luxury brands have been raising prices for their handbags as well.
In mid-January, Celine’s sister brand Dior, also hiked its prices, with a small-sized Lady Dior jumping a whopping 17% to Rmb41,000. Hermès, maker of the Birkin and Kelly handbags, has upped the prices of its silk scarves by at least 10%. Some of its popular handbag styles like Lindy also went from Rmb59,600 to Rmb65,300 (assuming you can get your hands on one, see WiC555).
While luxury houses like Chanel have attributed the price increase to a soaring cost of labour and raw materials, Celine offered no such explanation. As a result, some have speculated that it is trying to drive up demand by creating the perception that consumers should buy now to beat the next hike.
“It is clear the price hikes reflect Celine’s growing confidence with its brand. On the one hand, its prices constantly going up may encourage buyers to rush to buy now. But on the other hand, brands also need to carefully consider their price positioning. After all, there are only a handful of brands, like Hermès and Chanel, that are truly deemed investment pieces,” one fashion blogger observed.
“Rising prices confirm a perception of value, which creates the illusion of scarcity and exclusivity – particularly in China, where the selection of products can be limited. Still, this is not the only key to opening Chinese hearts and wallets. Aside from creating classic products, luxury must embed meaning to boost sales, too,” Jing Daily advised.
The ‘Great China Handbag Inflation’ cycle has left many consumers feeling depressed, however. “Why does it feel like while my salary and personal wealth hasn’t gone up, everything else keeps going up in value?” one netizen sighed.
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